Is America worth more dead than alive?

I ran across this blog about Credit Default Swaps, and another titled A Credit Default Swap Primer, which led me to raise the above question. Imagine the game the short sellers could/would/have played naked shorting stocks that they have taken CDSs for. If, as the articles mention, there are $58 Trillion of CDSs to insure the $6 Trillion of US corporate debt, there seem to be a lot of stakeholders that would like to collect that $58 Trillion as companies file for bankruptcy. So, are we being purposely set up for failure by some truly sadistic people, in order to collect on it? I would like to know the answer, and truly hope that it is a resounding no.

Several weeks ago I wanted to by a Macintosh and checked Craigslist to see if there are any good deals. I found an amazing deal for a Mac Book Pro for $1200; it sells for $2000 at the Apple Store. I sent a quick e-mail asking if I can come and take a look. A day later, I got a reply back; "I still have the laptop. But the thing is that I'm in the U.K. for my school (I have the laptop with me)...." and a way for us to complete the deal fast. This was just what I expected... a student in UK, trying to sell his laptop in Atlanta for dirt cheap. I have heard of this scam too many times, so I elected not to pursue this any further. But it looks like Wachovia and Citigroup have fallen into this same exact trap buying Credit Default Swaps from a tiny company in an inaccessible jurisdiction. With people like this running our financial system, I don't know whether to laugh or to cry! Truly amazing!

Here are some very interesting and disturbing eye openers that talk about the crisis we are facing.

• The Rising Risk of a Systemic Financial Meltdown: The Twelve Steps to Financial Disaster
  
• The $55 trillion question
  
• Credit Default Swaps: Evolving Financial Meltdown and Derivative Disaster Du Jour
  
• Are You Exposed to Credit Default Swaps?
  
• Credit Default Swaps: The Next Crisis?
  
• Mark-to-Market vs. Mark-to-History
  
• Fairfax Financial Sells Credit Default Swaps for C$574.5-Million
  
• The Monster That Ate Wall Street
• Wikipedia
• Tying Interest Rates to CDS Is a Recipe for Main Street Disaster

digg this article.